All Aviation Articles By greg reigel

Understanding The “In Furtherance Of A Business” Limitation On Sport Pilot Privileges

An airman holding a sport pilot certificate recently asked me if the airman could fly to a location where the airman anticipated having a business meeting.  However, the airman indicated that he wasn’t necessarily flying to the location because he had to, but he wanted to in order to build time.
Unfortunately, based upon those facts it is likely the FAA would interpret the flight as being in furtherance of the airman’s business.  As a result, the airman would not legally be able to conduct the flight holding only a sport pilot certificate.  Here’s why.
Under 14 C.F.R. §61.315(c)(3) an airman holding a sport pilot certificate may not act as pilot-in-command of a light-sport aircraft “in furtherance of a business.”  The regulation does not explain what it means to fly “in furtherance of a business.”  However, the FAA Office of Chief Counsel has issued several letters of interpretation that provide some clarification.
In the 2011 Gilbert Legal Interpretation, the FAA stated that flight incidental to the airman’s employment or the business the airman intends to conduct, even if the flight is not required by the airman’s business, would be considered “in furtherance of a business.”  As a result, a sport pilot would be prohibited from conducting this type of flight.
The FAA explained further in the 2012 Allen-Terrafugia Legal Interpretation that “[a] flight would therefore be considered to be in furtherance of a business if it were conducted for a business purpose, even if the flight is only incidental to that business purpose.”  The FAA also noted that the sport pilot limitation is more restrictive than the “incidental to business” exception to private pilot limitations under 14 C.F.R. §61.113(b).
So, if you are an airman exercising the privileges of a sport pilot certificate, you are only authorized to conduct sport and recreational flights.  A flight in connection with a business purpose is prohibited under the regulations.

Disclosing Medical History On An FAA Application For Medical Certificate Is Not Limited To “Diagnoses”

If you have applied for an FAA medical certificate you know an applicant must complete FAA Form 8500-8GG via MedXPress and answer the questions on the form.  The FAA uses the information disclosed on the application to determine whether an airman is qualified to hold a medical certificate issued under 14 C.F.R. Part 67.
Question 18 asks for information regarding various medical conditions and circumstances that could have an impact on an airman’s medical qualification.  The preamble to Question 18 asks the applicant in all caps whether he or she has “EVER IN YOUR LIFE BEEN DIAGNOSED WITH, HAD, OR DO YOU PRESENTLY HAVE ANY OF THE FOLLOWING?”  The airman is required to answer “yes” or “no” and, if “yes”, he or she must provide an explanation to the FAA.
Unfortunately, some airmen get hung up on the word “diagnosed” and either ignore or fail to consider the broader wording in the rest of the question. An example of this situation occurred in the case of Administrator v. Smith.
In Smith, the airman failed to disclose certain medications he was prescribed for fatigue and depression.  And in response to Question 18(m) (asking about depression), the airman checked “no.”  After the aviation medical examiner (“AME”) issued a medical certificate to the airman, the FAA learned about the medications.  It also discovered that one of the conditions for which the medications were prescribed was depression.  Not suprisingly, the FAA was not pleased.
Consistent with Order 2150.3C, FAA Compliance and Enforcement Program, the FAA revoked all of the airman’s certificates for violation of 14 C.F.R. § 67.403(a)(1) (intentional falsification).  After a hearing, the National Transportation Safety Board Administrative Law Judge affirmed the FAA’s order of revocation.
On appeal to the full Board, the airman argued, among other things, that he did not know he had been diagnosed with a mental disorder because his doctors didn’t share their formal diagnosis with him.  However, the Board rejected this argument.
The Board held the airman’s argument improperly attempted to narrow the scope of the preamble to Question 18 and, specifically, Question 18(m) (asking about “mental disorders of any sort; depression, anxiety, etc.”).  The Board stated

[i]t is clear from the text of the form and both versions of the accompanying instructions, that item 18(m) is not limited to a formal diagnosis.  Rather, any medical “condition” is to be reported.  The existence of an underlying condition is not dependent on [the airman] being told the formal diagnosis or condition.

It went on to conclude that even if the airman was not told of the formal diagnosis, he was still aware of an underlying condition for which he sought treatment.  As a result, the airman’s checking the box “no” in response to Question 18(m) was a false statement, and a violation of the regulations.
Unfortunately, this situation occurs more often then it should.  And the FAA’s response to falsification is predictable and unforgiving: revocation of all certificates.
When you are applying for a medical certificate, it is important that you read the questions carefully.  If you are concerned about whether something should be disclosed, do your research first.  Talk to your AME before you go in for your examination.  Or talk to an experienced aviation attorney who can help you understand the question and determine whether your circumstances require you to check the “yes” box.

Why Should An Aircraft Lessee Use An Operational Control Briefing?

As many of you are aware, the FAA has increased both its investigation of and enforcement against illegal charter operators.  One of the consequences of this heightened oversight is an increase in the FAA's scrutiny of Part 91 dry-leasing structures.  Using an operational control briefing in connection with those Part 91 flights can help minimize unwanted FAA attention.

To start, if structured properly, these leasing structures are legal and comply with FAA regulations. They ARE NOT illegal charter. However, in order to be legitimate, dry-leasing arrangements must be documented correctly.

The actual flight operations also need to be conducted consistent with those documents and the applicable regulations.  But proper documentation will not save an operator from FAA enforcement if the operations ignore the documents and are conducted as illegal charter flights.

How does the FAA figure out whether a properly documented operation is actually being conducted as an illegal charter?  FAA inspectors start asking questions.  For example, if an FAA inspector conducts a ramp check of a Part 91 dry-lease flight, he or she will first speak to the pilot. Next, the inspector will talk to the passengers in the back of the airplane.

The passengers' answers to the inspector's questions need to be consistent with a Part 91 dry-leasing structure. Incorrect answers can, and have, resulted in an illegal charter investigation of an otherwise proper Part 91 dry-lease flight.  And this is where an operational control briefing given by the pilot at the beginning of the flight can make all of the difference in the world.

The operational control briefing is intended to ensure that the passengers are able to tell the FAA inspector who has operational control of the flight.  Subject to a few very specific exceptions, the lessee, not the lessor, has operational control of a Part 91 dry-lease flight, even if the lessee or its principals are not physically on the flight.  The passengers need to know this fact so they can answer the inspector's questions correctly.

So, what should be included in an operational control briefing?  Here are a few, but not necessarily all, of the points that should be covered with the passengers:

  • The flight IS NOT a charter flight.
  • The flight will operate under Part 91 of the Federal Aviation Administration regulations.
  • The flight is operated under a lease between the aircraft owner (or another lessor) and the lessee.  And a copy of that lease agreement is in the aircraft.
  • The flight is under the operational control of the lessee.  (Identification of the lessee is critical, especially when the aircraft may also be leased to other affiliates or related entities).  This means that the passenger, by virtue of his or her relationship with lessee, has operational control of the flight.  He or she has the authority to initiate, conduct and terminate the flight.
  • The pilot is on board to help the passenger operate the aircraft in a safe and prudent manner and in full compliance with the applicable rules and regulations.  He or she will comply with the instructions and directions provided by the passenger, both written and oral, to enable the passenger to exercise operational control.
  • The passenger will still have operational control.  That operational control is only be subject to the pilot's authority to make all safety related decisions relating to the aircraft and the flight.

The operational control briefing should be used regardless of whether the flight is carrying the lessee (or its principal) or the lessee's employees/guests/invitees.  Although the lessee should understand the nature of the Part 91 dry-leasing structure to which it has agreed, the briefing can serve as a reminder of the basic requirements.

When the flight is carrying other passengers, the briefing is an important tool to make sure those passengers understand the nature of the flight so they are able to convey that information to an FAA inspector if or when asked. This will help prevent confusion and, perhaps, an unwanted investigation.

At the end of the day, it is the lessee's responsibility as operator of the aircraft to make sure the lessee's flights are conducted legally. An operational control briefing is a simple, but effective way to make sure the folks in the back of the aircraft also understand who is responsible for the flight.

When Is An Arbitration Clause In An Aircraft Purchase Agreement Enforceable?

As with many legal questions, the lawyerly answer is "it depends."  However, generally speaking, yes, arbitration clauses in aircraft purchase agreements are enforceable.  Here's why.

Courts favor arbitration.  Whether a claim is subject to arbitration will depend on the contractual language in the purchase agreement.  A court will presume a claim is subject to arbitration if an aircraft purchase agreement has an arbitration clause and an interpretation of the clause covers the claim. But that presumption may be rebutted.

When Does This Issue Come Up?

If a party to an agreement containing an arbitration clause is sued in court by the other party, the party being sued may ask the court to force the other party to submit its claims to arbitration. The court must then determine (1) whether an agreement to arbitrate was entered into and (2) whether the dispute falls within the scope of the arbitration provision.

Did The Parties Agree To Arbitrate?

Typically, a court will find that the parties agreed to arbitrate if the aircraft purchase agreement contains an arbitration clause or provision.  However, this may not be the case if the arbitration provision itself was fraudulently induced, which will be addressed in more detail below.

What Issues Did The Parties Agree To Arbitrate?

Assuming the first factor has been satisfied, the court will look at the language of the parties' agreement to determine what issues they intended to arbitrate. The language must either specifically state the issues subject to arbitration, or it must be sufficiently broad to cover the claims alleged.  If the court determines that it is "reasonably debatable" whether a dispute is subject to arbitration, it will require that the dispute be arbitrated.

Examples Of Arbitration Language.

An arbitration clause in an aircraft purchase agreement that states

“any controversy or claim arising out of or relating to this agreement, or the alleged breach thereof”

will likely be considered broad enough to encompass most claims relating to the agreement.  In that instance, a general attack on the purchase agreement alleging that it is void because it was fraudulently induced or the result of mutual mistake would still be subject to arbitration.

Conversely, an arbitration clause stating that it covers

“any claim arising out of or relating to the physical condition of the aircraft”

will only include claims with respect to the condition of the aircraft but not issues of whether the parties actually agreed to arbitrate.  Without some evidence of the parties' intent to arbitrate them, claims of fraud in the inducement of the agreement to arbitrate, rather than claims of fraud with respect to the aircraft purchase agreement as a whole or the condition of the aircraft, would be decided by the court rather than an arbitrator.

To put it another way, the court will not consider claims of fraud in the inducement of the aircraft purchase agreement generally.  Those claims will have to be arbitrated.  Only where the claim of fraud in the inducement goes specifically to the arbitration provision itself will the claim be decided by the court rather than the arbitrator.

Conclusion

If you have an arbitration clause in your aircraft purchase agreement, you will need to carefully review the language and compare it to the claims at issue.  Broad language means all claims will likely have to be arbitrated, including claims that the agreement to arbitrate was fraudulently induced.  Anything less than that broad language and claims may or may not be subject to arbitration.

ADS-B Compliance: The Potential Consequences Of Violating Rule Airspace

As most aircraft operators know, or should know, aircraft must now be equipped with ADS-B Out in order to fly in most airspace within the U.S.  Although it is possible to take advantage of limited waivers or exceptions, generally speaking ADS-B Out is required for operations in "Rule Airspace."

In connection with this requirement, the FAA recently updated Order 2150.3C - FAA's Compliance and Enforcement Program to explain potential sanctions for aircraft operations that do not comply with the ADS-B Out mandate.  Specifically, Chapter 9 of the Order now identifies the FAA's sanction policy/guidance for ADS-B related violations.

It is important to understand that the FAA will be taking these violations seriously. For example, if the FAA believes an airman is transmitting inaccurate ADS-B Out or transponder information with the intent to deceive, or is operating an aircraft without an activated transponder or ADS-B Out transmission (except as provided in 14 C.F.R. §91.225(f)) for purposes of evading detection, it will revoke that airman's certificates.

The sanction for other violations are not as severe, but are nonetheless significant.  The FAA characterizes the severity of the violation based upon levels of 1, 2 or 3, with Severity Level 3 being the most serious. And depending upon whether the FAA views the violation as careless or reckless/intentional, the sanction range could vary from low to maximum.

The FAA evaluates violations based upon impact on safety.  "Technical Noncompliance" involves violations where serious injury, death, or severe damage could not realistically occur as a result of the violation conduct, even if theoretically possible. A violation with a "Potential Effect on Safety"  occurs in a situation where serious injury, death, or severe damage could realistically result, but under the facts and circumstances would not often occur. Finally, a violation falls into the "Likely Effect on Safety" category where serious injury, death, or severe damage may occur more often as a result of the violation conduct.

When the operator fails to comply with ADS-B Out performance or broadcast requirements due to technical noncompliance, the violation is considered Severity Level 1. If the failure to comply with ADS-B Out performance or broadcast requirements has a possible effect on safety then the violation is Severity Level 2. And, not surprisingly, when the failure to comply with ADS-B Out performance or broadcast requirements has a likely effect on safety then it is a Severity Level 3 violation.

The specific sanction will also depend upon the type of violator.  If the violation is by an individual certificate holder, the airman will likely be facing suspension of his or her certificates.  An individual acting as an airman or a business entity will face a monetary civil penalty. In the case of a business, the amount will vary depending upon the size and revenue of the entity.

So, depending upon the circumstances, an individual certificate holder could face a suspension of his or her certificates for 20 -60 days, 60 -120 days, 90 -150 days, or 150 -270 days, depending upon whether the violation is in the low, medium, high, or maximum range, respectively. Other individuals and businesses could face civil penalties ranging from $100 to $34,174 per violation, depending upon the nature of the violator and how the FAA categorizes the violation.

In the event of multiple violations arising from the same act or omission, the FAA may give special consideration if the violation was careless, as opposed to reckless/intentional violations which receive no special consideration.  For an individual certificate holder the suspension could be anywhere from 30 -90 days, 90 -150 days, or 120 -180 days, depending upon whether the violation is Severity Level 1, 2 or 3, respectively. And an individual acting as an airman could be assessed a civil penalty in the amount of $5,000 -$10,000, $7,500 -$15,000, or $10,000 -$20,000, again depending upon whether the violation is Severity Level 1, 2, or 3, respectively.

For other individuals, the civil penalty could range anywhere from $50,000 to $200,000.  And business violators could be assessed civil penalties ranging from $50,000 to $600,000 depending upon the nature and size of the business, as well as the Severity Level of the violation.

Conclusion

Order 2150.3C provides the FAA inspectors and attorneys with a checklist for determining sanction in any given case involving an ADS-B violation.  Unfortunately, when a case gets to the point where the FAA is determining sanction, the actual calculations and method for arriving at the final assessed civil penalty is usually withheld.

However, it is important to understand that the facts and circumstances involved in any given case have an impact on both how the sanction is calculated as well as the amount of the civil penalty assessed.  If you find yourself defending against an alleged violation of Rule Airspace, knowing this information can help you defend yourself and, hopefully, successfully resolve the matter.

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